CAIRO: A significant decline in energy prices over the past several weeks has sounded an optimistic note during a stormy time for the world economy. The decline of oil may also lead to a reduction in price pressures that have afflicted many of Egypt's industries. Oil prices, which can be notoriously hard to predict due to rampant speculation, have fallen in the past few weeks due to a decline in US demand as well as a handful of new drilling projects. On Thursday, prices neared $119 a barrel. The cost of oil began its long climb months after September 11, 2001, when the US broke out of its post-attack paralysis. At the time, oil was under $30 per barrel. In the wake of the September 11 attacks, OPEC delayed quota cuts for member nations until early 2002, at which point prices began to move upwards in the face of lower OPEC supply and a 20-year low in American reserves. In 2003, with civil strife diminishing oil production in Venezuela and war the Iraqi supply, excess oil production capacity plummeted and prices began their unsteady march through $40 and $50 per gallon. Undergoing a 100 percent price increase in four short years, oil hit $100 per gallon in January of this year, a price it sustained a month later. By mid-July, oil prices hit a high of $147 per barrel. Some reports speculated that oil hit its mid-summer peak as the result of a weakening dollar and the saber-rattling missile tests conducted by OPEC's second largest member, Iran. Some attribute instability in the price of oil to speculators who buy and sell oil futures based on a host of determining factors not always related to the more basic metrics of supply and demand. US Energy Secretary Samuel Bodman, however, tried to diminish the role of speculators in an interview with NBC News this June, instead blaming weak supply for the recent price woes. Others have blamed 12-member OPEC for acting as a cartel by maintaining a quota system for national oil production. OPEC disputes the criticism. Despite the oil woes of recent years, there are hopeful signs that the price drops in recent weeks will re-energize the global economy. Falling oil prices in the States, a world economic leader, have led to a decline in the prices of commodities. Bloomberg reports that wheat prices are down 10.9 percent, gasoline is down 17.4 percent and natural gas is down 35.4 percent. These falling prices, indicative of falling prices in many places around the world, are likely to spur consumer spending which may help dampen bearish talk of a global recession. Even if those who blame speculators for unstable prices are not to be believed, consumer confidence is still a critical component to re-energizing the global economy. RBC Financial released a statement Thursday, detailing the findings of its latest consumer confidence report. Its Consumer Attitudes and Spending by Household (CASH) Index posited a notable increase in consumer confidence to 33.8 points out of 100, up from 14.6 points in July. High global oil prices have also had an impact on the Egyptian economy. Rising prices have meant increases in the prices of everything from steel to wheat. Energy prices have driven real estate prices out sky-high and have left the poor hungry. Indications suggest, however, that the nascent trend of falling oil prices have yet to make a meaningful imprint on the Egyptian economy.
